Suppose we have an ordered basis $\{v_1,\dots,v_n\}$ in some inner product space. Let us project a vector $v$ on each $v_i$ by multiplying $v_i$ by the "scalar projection" $(v,v_i)/\|v_i\|$. Intuitively, it seems that each scalar projection $(v,v_i)/\|v_i\|$ indicates the amount of $v$ that goes in $v_i$ and therefore the $i^{th}$ coordinate of $v$ should be $(v,v_i)/\|v_i\|$. But that does not happen unless the basis is orthogonal.
Mathematically I can justify this but can someone give an intuitive reason as to what goes wrong. For example with $B=\{(1,0),(1,1)\}$ in the Euclidean space $\mathbb R^2$ where $v=(0,1)$?

In a nutshell, the problem is that you end up overcounting components of the vector in “overlapping” directions. You’re trying to decompose the vector $w$ into $\sum\mathbf\pi_kw$, where $\mathbf\pi_k$ is orthogonal projection onto $v_k$. If $v_i$ and $v_j$ are not orthogonal, then $\mathbf\pi_jv_i\ne0$, so if $\mathbf\pi_iw\ne0$, it will make an excess contribution to the projection onto $v_j$. To put it another way, if $v_i$ and $v_j$ are not orthogonal, this introduces an undesirable dependency between the $i$th and $j$th coordinates of $w$: if we change the $i$th coordinate, this excess contribution of $v_i$ in the $v_j$ direction will also change the $j$th coordinate.
In order to produce coordinates with these individual projections you have to eliminate this “overlap” among the non-orthogonal basis vectors, which is precisely what the Gram-Schmidt process does.
Addition: The phenomenon can be illustrated in $\mathbb R^2$. Let $v_1=(1,0)^T$ and $v_2=(1,1)^T$. We can see in the diagram below that if we add up the orthogonal projections of $w$ onto these two vectors, we don’t end up with $w$.
This diagram also suggests a way to salvage our decomposition via projections. Instead of projecting orthogonally, project parallel to the other basis vector (indicated by the black dotted lines). We then get the familiar parallelogram addition diagram that we all know and love. This provides another intuition into what’s going on: in a sense, orthogonal projection goes in the wrong direction.
We can also see from this diagram exactly what the excess contributions are. If $\mathbf\pi_1'$ and $\mathbf\pi_2'$ are the two parallel projections, then $\mathbf\pi_2w$ is too long by exactly $\mathbf\pi_2\mathbf\pi_1'w$, i.e., the orthogonal projection of the actual component of $w$ in the $v_1$ direction onto $v_2$, and similarly for $\mathbf\pi_1w$.
The salient feature of these parallel projections is that $\mathbf\pi_2'v_1=\mathbf\pi_1'v_2=0$. This property can be extended to higher-dimensional spaces. Instead of using orthogonal projection, we want projections such that $\mathbf\pi_i'v_j=0$ when $i\ne j$ or, equivalently, $\ker{\mathbf\pi_i'}=\operatorname{span}(B\setminus\{v_i\})$. Constructing such projections is relatively straightforward.